Dubai: The UAE Banks Federation (UBF) recently launched a financial literacy handbook for small and medium enterprises (SMEs) aimed at improving the level financial awareness in the country.
The handbook seeks to equip business owners with knowledge and skills that will enable them to make sound financial decisions and ultimately operate their businesses successfully.
“In an increasingly complex financial environment, it is essential for entrepreneurs — particularly owners of SMEs — to have a strong grounding in the principles of business finance to keep their business afloat. SMEs play a critical role in an efficient and competitive economy, and a thriving SME ecosystem will positively contribute to a society’s economic stability and development” stated Abdul Aziz Al Ghurair, Chairman of UAE Banks Federation.
Representing over 60 per cent of the country’s GDP and employing 42 per cent of its workforce, small and medium enterprises (SMEs) form the backbone of the UAE’s economy. SMEs, which make up 94 per cent of all companies operating in the country, account for a good share of the customer base of local banks, another cornerstone of the country’s economy.
“Financial education offers entrepreneurs a deeper understanding of business strategies and objectives, as well as the availability of financing options and support services. It also leads to proper financial planning, which enables small businesses to maximise their chances of business success by taking advantage of business opportunities and weathering business downturns,” Al Ghurair said.
The handbook calls on SME owners to acquire skills to distinguish between personal and business finances and possess sufficient knowledge of key accounting standards and book-keeping as well as legal and regulatory frameworks, rights and resources in order to become financially literate. Emphasising the importance of knowing the right business structure, the handbook highlights different types of companies and various characteristics of robust and effective corporate governance framework, which is an indispensable building block in creating stable businesses.
It is important for SME owners to manage debts to protect their business. The ‘Financial Literacy for SMEs’ handbook offers an in-depth insight into different aspects of debt management and provides tips for identifying debt warning signs and effectively managing debt. Additionally, it sheds light on different types of fraud that can affect a business, including compensation fraud, invoicing fraud, skimming, and cheque fraud, among many others. Furthermore, the handbook offers important tips for SME business owners to prevent fraud.